In private equity, where every investment is a calculated risk, the role of technology in shaping the future of businesses cannot be underestimated. Without the right tools to navigate this intricate landscape, investors might face a black box where uncertainties outweigh returns.
In acquisitions, most failures occur during the post-acquisition integration phase. One of the key reasons behind this is the concealed risks associated with technology. Every investor should ask, "What if the target does not fulfill our hypothesis, and how can we avoid that?"
You can find the guiding answer to that question in technology due diligence.
The Nature of Technology Investments
The challenge stems from insufficient groundwork on the tech front, causing unexpected integration costs and operational bottlenecks. Committing substantial capital without fulfilling the investment hypothesis is a costly mistake many PE investors targeting technology companies tap into.
A comprehensive pre-acquisition assessment can prevent such situations. Without careful examination of legacy code, technical debt, third-party dependencies, and other factors, software can cause scalability and compliance challenges. The outcome of overlooking these factors can be a disjointed technology integration that introduces operational conflicts, technological limitations, and, in the worst case: An elevated risk of not realizing the investment hypothesis.
Best Practices for Conducting Tech Due Diligence
The relevance of technology due diligence extends beyond the initial deal sourcing and evaluation phase. Successful post-merger technology integration is equally vital. But what’s the process like in practice, and what makes it difficult for PE investors?
Effective tech due diligence demands specialized acumen paired with objectivity. The first is a cornerstone of internal and external IT experts who are relevant to the investment case. Objectivity, on the other hand, is a strong suit mostly of external experts, given that internal assessments carry the risk of subjective judgments.
Unlocking Value in 45 Minutes
To help investors succeed in their technology investments, experts like Mart Lumeste from Intium enter the picture. He brings unparalleled expertise as an IT industry veteran with two decades of diversified experience.
Intium's team has helped investors in over 450 successful projects, providing an independent and objective assessment and a crystal clear picture of their investment targets.
This is why you should not miss your chance to join Mart and fellow PE investors in the upcoming Midaxo webinar on September 26th. You will learn firsthand how to reveal hidden red flags in tech investments, ensure integration according to plan and budget, and understand the 100-day value creation plan.
In this concise 45-minute webinar, you will gain firsthand insights from Mart into:
How you can safeguard your investment hypotheses with tech due diligence.
Strategies for effectively planning and executing post-merger technology integration.
Best practices to ensure that technology integration remains on track and within budget.
If you cannot attend live, rest assured, you will receive a recording via email following the live event.
We look forward to having you with us on September 26th.